B.C. court approves sale of struggling outdoor equipment retailer MEC to U.S. firm
|Toronto Star 02 Oct 2020 at 17:22|
A B.C. court has approved the sale of struggling outdoor recreation retailer Mountain Equipment Co-op to a U.S. private investment firm.
In an oral ruling Friday, B.C. Supreme Court Justice Shelley Fitzpatrick accepted the sale of MEC to California-based Kingswood Capital Management.
She also dismissed an application by the Save MEC group to delay the sale by two weeks, part of an effort to preserve the retailer’s status as a co-operative.
“It’s disappointing,” Kevin Harding, the national spokesman for the Save MEC campaign, said in an interview.
“We’ve known from the beginning that this was a bit of an uphill climb,” he said. “The laws that are around the (creditor protection) process don’t recognize co-ops or members as being important in the slightest, so the odds were stacked against us.”
A petition launched by the group against the sale had garnered nearly 145,000 signatures by Friday.
“The groundswell of passion that has come up around this process is evidence that people really care about co-ops and community organizations,” Harding said.
He said the judge noted the passion of the co-operative’s members in her oral ruling.
Meanwhile, Harding said the decision raises important questions about the laws governing co-operative organizations in Canada, and the legal rights of members.
The judge also dismissed an attempt by landlords of some of MEC’s stores to intervene in the proceedings.
On Sept. 14, MEC filed for creditor protection and announced its sale to a Canadian subsidiary of Los Angeles-based Kingswood.
Despite a struggle with sluggish sales, inventory issues and increasing online competition, the severity of the retailer’s financial woes and its decision to sell came as a surprise to members.
The 49-year-old retailer traces its roots back to a group of West Coast mountaineers, who came up with the idea of opening a Canadian outdoor recreation store on a climbing trip.
The grassroots co-operative officially launched in 1971 with six members, and now has roughly 5.8 million co-op members – a status that will be lost once the sale goes through.
A spokeswoman for Kingswood said in an email Friday the company would not be issuing a statement on the ruling.
A spokeswoman for MEC did not immediately respond to a request for comment.
In response to a backlash against the sale, Kingswood and MEC issued an open letter to co-op members earlier this month.
“We understand the news of MEC’s sale – to an American private equity firm no less – is concerning to some members,” said the letter, signed by incoming CEO Eric Claus and Kingswood managing partner Alex Wolf.
The letter said the company plans to put customers and employees first by focusing on stores and supporting the “passionate people on the floor who have real knowledge and expertise” of the outdoor technical gear the store sells.
“We will be reducing the amount we spend on corporate overhead to increase the amount we spend on people, products and community,” the letter said.